Are England's Millionaires Being Tall Poppied?
When somebody says it is not about the money, it is about the money. H. L. Mencken
England saw a significant exodus of millionaires last year. Are these millionaires victims of TPS? Are the cutters envious, or are the millionaires egregiously greedy? (see Anatomy of the TALL POPPY SYNDROME).
Non-Dom
Non-dom, short for non-domicile, is a tax status in the UK for residents whose permanent home or domicile is outside the country. It originated in 1799 to protect colonial investments. This status allows individuals to pay UK tax only on their UK income while avoiding tax on global earnings and capital gains unless they bring that money into the UK.
In early 2024, the UK government announced plans to eliminate non-dom status to raise revenue and appease "voters. " Beginning in April 2025, non-doms will be taxed under the residence
e-based system once they have been in the country for more than four years. This change is expected to generate £2.7 billion (pounds) annually for the government by 2029. The exodus accelerated after the July 2024 general election.
England has a significant number of non-doms. More than twenty percent of bankers earning greater than £150,000 (pounds) claim the status. Other industries include oil, automotive, and football. The Premier League has approximately 370 non-dom players.
The government claims it will still be competitive with other global governmental taxes, but that may be less true in Europe. Italy, Malta, Ireland, Spain, Switzerland, Andorra, and Greece have more attractive non-dom packages.
Mass Exodus
The Labor Party's new tax policies, including revision of the non-dom status, resulted in the departure of 10,800 wealthy individuals from British shores in 2024, a whopping 157% increase from 2023. The exit included one millionaire every 48 minutes, 78 centi-millionaires and 12 billionaires. Only China lost more.
The most common relocation sites were Italy, Malta, Switzerland, Portugal, Cypress, the United States, the United Arab Emirates, and Australasia. Other popular sites included the Caribbean Islands, Canada, Singapore, South Africa, and Thailand. Not only does England lose tax revenue but also billions in investment capital.
The Law of Unintended Consequences
The law of unintended consequences is a phenomenon where actions or decisions lead to unforeseen and unintended results, often distinct from or contrary to the original purpose. This concept applies to various fields, including economics, social sciences, and policymaking.
British Culture
Sam Stoffel is the CEO of Outplayed.com, a company that uses matched betting to turn bookie-free bets into cash. Stoffel recently posted his opinion regarding the millionaire exodus on Linked In, which opened a can of worms.
Stoffel argues that entrepreneurs choose places like the United States and Dubai because they are valued and encouraged. He correctly notes envy and risk aversion drain the country of its most ambitious minds.
Capital goes where it is welcome and stays where it is well treated. Walter Wriston
Stoffel also cited an example of a friend who disengaged because "we had 'nothing in common' since he had become successful." He further believes this reflects a broader issue: Britain's culture of resenting wealth instead of celebrating it.
Stoffel may miss the point that his friend feels financially inferior and can no longer run in his tribe. It is well known that tribes are divided by wealth, and your best friends have similar incomes. It might be better to leave than to display bad envy and cut him down. There is always good envy, but his friend may have good emotional intelligence and realize he can never match him financially.
Business Insider correspondent Tom Scourfield recently explored the cultural differences between the UK and the U.S. concerning entrepreneurship. He discovered three key differences between how the two nations appreciate ambition and success.
Ambition is exhorted in America while restrained in England. New ideas are often discharged for various reasons, such as personnel support costs. Conservatism, or the traditional path, is supported rather than dreaming big and disrupting.
Entrepreneurship is a career goal in America versus the road well traveled and reliable, as well as higher education and secure employment. Fellow Brits often mock those who go it alone.
Failure is part of the process. Elon Musk views failures as teaching moments. England sees humiliation and defeat.
Scourfield specifically calls out TPS as part of British culture, claiming it is more deeply engrained in their culture. He concludes that Britain will continue to lose its wealthiest and most inventive to more welcoming countries.
I agree with his conclusion that TPS seems to play a role. An overspending government requires additional resources to "soak the rich," which it knows is popular and supported by envious voters - public TPS (see Anatomy of the TALL POPPY SYNDROME).
Stateside
Illinois residents toil with a 4.9% flat income tax rate and a 9.5% corporate income tax rate. Neighboring Indiana's 2026 flat income tax rate is 2.95%. Indiana's state house has voted to allow some Illinois counties to secede and join Indiana.
The same modus operandi is playing out in England and between adjoining states. Chicago has more social ills than the rest of the state, which requires more dollars from all the counties. Some rural states do not feel obliged to pay for Chicago's problems and want to leave. This is more of an example of peer-to-peer TPS, although unrecognized in America.
Ken Griffin, the TP billionaire founder, and CEO of Citadel, left Chicago in 2022 due to several key factors, including rising crime, employee preferences, a better business environment, and the need to attract and retain talent. The move involved relocating Citadel's headquarters and more than 1,000 employees from Chicago to Miami. It should be noted that Chicago leads the nation in corporate relocations.
This departure was significant not only due to Griffin's wealth but also because it led to the loss of high-paying jobs and considerable tax revenue for Illinois. Over the past decade, Citadel and its employees contributed billions of dollars in tax revenue to Illinois and Chicago. As a result, the departure has caused a significant decline in tax revenues.
Griffin donated over $600 million to various Chicago organizations. His departure may reduce philanthropic contributions to the city.
Capital goes where it is welcomed, and so do TPs. This case study serves as a warning to our federal government. Over-taxing high-earning TPs may drive them out of America instead of relocating to a more financially friendly state.
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